nextopia

Back again with eCommerceOutdoors’ co-founder and marketing head “Do it All” Patrick Gill. In this second half of our interview, we’re focusing on technology–the past, present and a future that looks increasingly to be an open source one. (Read Part 1 here).

Moving to technology and the nut and bolts of operating a site. Yahoo! Stores is well known as an excellent place to get started in online retailing and you’ve been on it for years now. Now that you’ve become a successful retailer, what are the pros and cons for remaining with Yahoo!?
Yahoo! offers retailers a very affordable platform that saves you lots of headaches. I think it would be difficult to find a PCI compliant, fully hosted ecommerce platform for the same budget. Particularly if you went the do-it-yourself route, say, by getting a server from Rackspace. While I think the price provides excellent value, your flexibility is limited. The back-end prevents you from doing some things simply. You’re forced to customize and create workarounds. There are extreme differences between an established platform like Yahoo! and Magento, which was designed from scratch for web 2.0/3.0 (or whatever they’re calling it these days).

As a company, we’re pretty loyal to Yahoo! and the Yahoo! platform. Still, if a company knows that it will grow beyond $5-15M in annual sales, I think they are going to ultimately regret choosing Yahoo! When we launched our newest store, I wanted to see what I was missing, which is why I researched alternatives and ultimately chose Magento. Revamping that site has been a good learning experience and an opportunity to really see the pros and cons of Yahoo!

Is Yahoo! a flexible platform for integrating the latest operational, web design, merchandizing and payment technologies and services?
Yahoo! isn’t a platform that offers the latest and greatest. It is always a couple of steps behind and there are number of integration and technology challenges that are really frustrating. One of the most obvious examples is integrating an alternative payment option like Google Checkout. While the Google Checkout icon can help your PPC clickthrough rates, if you actually want to integrate it, you’ll violate the terms of your Yahoo! agreement.

Talk about the Yahoo! Stores retailer and developer communities…what are their value?
These communities are really important. When we started out, we didn’t outsource anything because we couldn’t afford it. We learned Yahoo’s proprietary programming language, RTML, and grew the site to a level where we could afford to outsource. Once we had a development budget, we tapped the developer community. The sites wouldn’t be where they are today without the contributions of the professional store developer community.

Talking specifically about the Yahoo! platform, what are three things that you did that you would have done differently had you known better?
A. I’d like our site to be faster. We need to make some optimization changes but I’m going to have to do some research because I’m not sure right now if it is the underlying code or a graphics issue.

B. We need a lot more sophistication in our supplier chain. I would have really loved to have spent a lot more time developing real-time integration of our inventory data. We’ve since created workarounds but they are not as ideal as doing the most effective way right from the beginning.

C. The third change would have been to spend a lot more time and care building our product database. It is really valuable to have complete product information or attributes (notably dimensions and weights). This is especially true for retailers who drop ship. Complete product data helps minimize shipping costs. It helps you provide real-time shipping calculation to customers when they are in your shopping cart. It helps you calculate by dimensional weight. I can’t overemphasize the importance of having an accurate and up-to-date database.

How does Nextopia’s site search technology and modules that you use fit into the Yahoo! Stores world?
Nextopia integrates very easily into the Yahoo! Stores platform and we’ve been a happy customer for over three years. In a perfect world, your product database includes all of the relevant product attributes, which enables you to filter search results. In general, site search benefits a retailer in proportion to the completeness of the underlying product database. By working with Nextopia, we’ve been able to implement some solutions but as I said just now, I really wish we had built our database with complete product attributes from the beginning.

Enough about Yahoo!, let’s talk about Magento and your newly revamped site, IslandBeachGear.com.
Even though Magento’s basic version is open source and the vendor doesn’t charge for it, it isn’t your least cost option by any means. Magento is neither simple, nor is it free. It took many, many hours to develop our IslandBeachGear.com site to the point where it is now. It required a lot of tweaking to get it right and you’ll probably require some knowledgeable developers. We used a combination of in-house resources and some third-party development. Additionally, the hosting level you need to have a fast website is expensive.

Nextopia Site Search integrated on a Magento site-IslandBeachGear.com

In contrast, you can get a Yahoo! Store up and running in no time. In about twenty minutes, I could create a functioning one or two SKU Yahoo! Store that could actually take orders and process payments. It wouldn’t look pretty but it would work. In contrast, Magento isn’t nearly as easy to use. The tradeoff is much greater flexibility. I’ve been very impressed by the design and usability and the out-of-box functionality. I love the flexibility. There is no limit to what I can do. I haven’t run into one adjustment or request that we couldn’t implement. With Yahoo, I run into roadblocks all the time. Magento is designed using the latest software technologies and online retailing, marketing and merchandising processes. The SEO capabilities, integrated reviews and real-time inventory access are great. That said, I would love it if Magento provided an on-demand platform like Yahoo!

Thanks very much to Patrick. Great information and guidance from someone who’s been in the ecommerce trenches for a decade. As you can see, the road to success requires a lot of hard work and iterative trial. If you fish or know someone who fishes and might appreciate an angling-themed Christmas gift, you know where to start your shopping.

Can you give us a quick summary of your company, operations and markets.
We’re an ecommerce retailing company, currently operating four sites in the fishing and outdoor leisure markets. Our corporate headquarters are in Somers Point, NJ and we run our Island Beach Gear retail store in Ocean City, NJ. In total, we have 25 full-time employees. We’ll add seasonal staff during the peak fishing and beach-related retailing months (spring and summer). Our fishing sales are split 80% in the United States, with the balance from overseas markets. The big overseas markets are South America and the United Kingdom with some sales in parts of Asia. Our beach gear sales are almost exclusively North American sales.

Who are your competitors?
We’re a specialty fishing retailer. We don’t generally–or even try to–compete against mass merchandizers like Wal-mart or the national chains like Cabela’s or Bass Pro Shops. We win customers on service and know-how, not private branding or discounting. There are probably 6,000 independent fishing retailing stores in the United States, the vast majority of which are small Mom and Pop stores. To give you an idea of the market fragmentation, a really successful independent fishing retailer will do one million dollars annually in sales. But while they’re small, these local stores are really important because they know their regions. They know specifically what works in the local rivers and lakes and costal waterways. In contrast, our specialized knowledge is product-centric. Our company and our sales reps have lots of product knowledge, but the local fishing market knowledge is found in local stores. A final word on this retailing category is the fact that people who like to fish have been much slower to adopt to Internet product sourcing than in other categories.

Let’s talk about mixing fishing and business, or in your case, making fishing your business. How often do you actually get out and test the products you sell?
While I do get out on the water, I’m the head guy so I’m not out as much as our customer service and sales staff. Our product buyers and customer service team all fish a lot because they have to test lots of gear to figure out what we should buy. I tend to test the beach gear products more often than the fishing catalog.

Let’s start by talking big picture. Your retailing properties target outdoor pursuits that are restricted by climate seasonality across much of the North American continent? How does the seasonality of your customer base affect your operations?
We sell a good amount of gear twelve months per year. We sell all types of fishing gear, primarily saltwater, although we also sell freshwater and fly fishing. But saltwater is definitely our focus. While fishing sales increase considerably in the summer, the winter months are not exactly dead. The seasonality issue is certainly real but we balance that against a very wide product selection.
How has your customer base been affected by the economic downturn since 2007?
Although our number of orders for the 2009 fiscal year were up over 2008, average order value was down. We’ve done much better than the industry average, I think, in 2010.

Has their behavioral change affected your growth plans?
When economic times are tight, focus on the things that are working. At times, your focus could be to gain market share, not lose it. We’re trying to do a better job at everything we do. We’ve reduced our PPC spend as well as adjusted some of our other marketing activities. Inventory projection is always a gamble but we have reduced large inventory purchases to extend our cash resources.

Has it changed your plans for upgrades in technology, marketing activities or third party services that you use?
I’m constantly evaluating third party add-ons like Nextopia site search, and I probably get several phone calls per week from vendors pitching me on some third party tool or conversion booster. I like to listen to learn if we’re not doing something that we should. You really have to distinguish between what can help you and what will waste your time. If something comes out that is better than what we’re using, we’ll make the change.

Nextopia site search helps fishing enthusiasts find exactly what they need among the thousands of product SKUs on TackleDirect.com

Two things I noticed that you are not using are reviews or videos on TackleDirect. Why not? Reviews are available on some of your sites but not all of them. Are you planning on integrating them any time? What are you thoughts about user generated content (UGC) and online retailing?
It is time to get serious about both reviews and video across all of our sites. Incorporating reviews into Yahoo! Stores isn’t easy. We evaluated review technology for our Yahoo! sites a while back and it was premature. We’ve also found limitations with PowerReviews on the Yahoo! platform. To really do the job well, we’ll probably have to redesign our product layout because our current site design doesn’t work easily. It will take some effort. In contrast, the Magento site (IslandBeachGear.com) included review software from the beginning. Integrating reviews into that site was far easier.

Any comments on UGC?
One thing I’d really like to create is some kind of customer showcase. We receive hundreds of pictures every year. We’ve received everything from pictures of landing a 1,000 lb. blue marlin, to a variety of world record catches to little kids who caught something really special. My favorite, though, has to be a picture several years ago from three guys who went to Thailand. One of them landed a huge tuna using a very special and very expensive fishing reel that cost over $1,300. What I loved about the picture was that the boat they were sitting in, a very beaten up 14′ aluminum, was probably worth $50.

Come back in a couple of days for the second part of our interview with Patrick.